Unique Characteristics of Project:
- One of the first projects financed through municipal bonds for the hospitality industry in the nation since COVID-19 shelter in place orders went into effect.
- Financing secured in part by new hospitality industry taxes authorized by special State legislation for the bond issuer.
- Pledged revenue structure helps accommodate both enhanced security for investors and protection for the operating budget of the bond issuer.
Executive Summary: NHA advised the Tahoe Douglas Visitors Authority for the issuance of $112 million in bonds to finance the construction of the $100M Tahoe South Events Center (TSEC). The TSEC will be a 138,000 square foot, 6000-seat, multi-use facility to host conventions, conferences, sporting events, trade shows, performing arts, and musical concerts. The project is the realization of over two decades of work in the Tahoe basin for creating such a facility.
NHA worked with the Authority’s financing and lobbying team to successfully secure the legislative approval of a new $5/night transient lodging surcharge on the Nevada side of South Lake Tahoe. In addition, NHA worked with the Authority’s financing team to formalize a pledge from Douglas County, Nevada, to convey a portion of tax increment revenues from the local redevelopment project area toward debt service payments on the bonds.
Due to the highly volatile nature of the pledged revenues (primarily hotel tax revenues), NHA worked with the Authority’s financing team to help create an innovative structure that utilized a “revenue stabilization fund” as a secondary reserve while providing a secondary source of operating revenues for the Authority.
The Authority sold their unrated bonds on October 26, 2020 and the bonds were over 7x oversubscribed, receiving broad market demand, a testament to the innovative structure and strong performance of the Authority through the COVID-19 pandemic.